Nearly 22 percent of the world’s electricity is now supplied by renewable energy, and Central America is part of this global transition. The region is a worldwide leader in hydropower and geothermal energy, and most Central American countries are developing wind power projects. Yet the region is far from harvesting its enormous renewable energy resources to their fullest potentials, according to a new report from the Worldwatch Institute, The Way Forward for Renewable Energy in Central America.

“Central America is at a crossroads,” said Alexander Ochs, Director of Climate and Energy at Worldwatch and a co-author of the study. “As the economies of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama expand, regional use of fossil fuels is growing quickly, while the use of traditional fuelwood, primarily for cooking, remains unsustainably high. These developments come with significant health, societal, and economic costs, including rising greenhouse gas emissions and worsening air and water pollution. Central America has the potential to meet 100 percent of its electricity needs with sustainable renewable energy, but the proper policies and measures need to be put in place now.”

The report assesses the status of renewable energy technologies in Central America and analyzes the conditions for their advancement in the future. It identifies important knowledge and information gaps, evaluates key finance and policy barriers, and makes suggestions for how to overcome both. The study serves as a “roadmap of a roadmap,” scoping the improvements needed to facilitate the transition to a sustainable energy system and establishing the necessary methodology and groundwork for comprehensive regional and national energy strategies.

“Central American countries have issued ambitious policy statements that express political will for the further advancement of renewables, and some of them have made significant progress. However, there is much room for improvement to reach the region´s full potential,” said Ana María Majano, Associate Director of INCAE Business School’s Latin American Center for Competitiveness and Sustainable Development (CLACDS) and a co-author of the study. “In many cases, countries lack binding long-term goals and a coherent development strategy to reach them. Concrete policy instruments are often missing or not working properly, and administrative ineffectiveness sometimes impedes full implementation.”

The report focuses on four “high-impact” areas for transitioning Central America’s energy systems:

Expanding access to sustainable energy in underserved communities through distributedrenewable energy. Across Central America, an estimated 7 million people have limited or no access to electricity services. Because many live in remote areas far from electricity grids, it is unlikely that centralized power systems will ever reach them, according to the report.

Slowing the region’s rapidly rising fossil fuel use for centralized power generation. Despite new investments in large-scale, grid-tied renewables—such as geothermal, biomass, wind, and solar—many Central American countries have plans to increase imports of oil, coal, and natural gas. “What is evident from our research is that the region pays an enormous socioeconomic price for its reliance on fuelwood and imported fossil fuels,” said Adam Dolezal, Worldwatch’s Central America Project Manager. “By integrating key externalities such as health and pollution costs, as well as lost economic opportunities such as job creation, into the costs of various energy technologies, the competitive advantage of clean energy solutions becomes even clearer.”

Addressing more aggressively the unsustainable use of fuelwood for cooking. Traditional biomass, especially fuelwood for cooking, continues to account for more than a third of the region’s energy consumption. Several countries in the region are seeking to establish or expand production of biofuels for transportation.Alternative sources of biomass as well as better harvesting and consumption practices are one step; renewable energy technologies are another.

Tackling the region’s rapidly rising energy use for transportation, a sector that in some countries already contributes the highest share of carbon dioxide emissions. The report notes that although Central American governments are undertaking measures to slow energy consumption and diversify fuels in the transportation sector, these efforts need to be scaled up enormously if climate and development goals are to be met.

The Way Forward for Renewable Energy in Central America draws on the latest available data to offer the most comprehensive study of renewable energy in Central America to date, providing key recommendations for moving forward and highlighting important knowledge gaps and action steps in the areas of technology, socioeconomics, finance, and policy. The report is the culmination of the first phase of Worldwatch’s Central America Sustainable Energy Initiative, launched in partnership with CLACDS, based in Costa Rica and Nicaragua, with funding from the Climate and Development Knowledge Network (CDKN) and the Energy and Environment Partnership with Central America (EEP).

Click here to download a copy of the report, The Way Forward for Renewable Energy in Central America.

This post was originally posted in World Watch Insitute.